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Special Report — Astroturf Overload – Broadband for America = One Giant Industry Front Group

"We're going to need another roll."

"We're going to need another roll."

Astroturf: One of the underhanded tactics increasingly being used by telecom companies is “Astroturf lobbying” – creating front groups that try to mimic true grassroots, but that are all about corporate money, not citizen power. Astroturf lobbying is hardly a new approach. Senator Lloyd Bentsen is credited with coining the term in the 1980s to describe corporations’ big-money efforts to put fake grassroots pressure on Congress. Astroturf campaigns generally claim to represent huge numbers of citizens, but in reality their public support is minimal or nonexistent. — Common Cause’s Wolves in Sheep’s Clothing Part II: More Telecom Industry Front Groups and Astroturf.”

The telecommunications industry has gone all out with a new super-sized front group claiming to “work to bring the Internet to everyone.”  The so-called Broadband for America (BfA) Coalition launched a new website, Broadband for America, which is completely infested with industry players and groups they call “independent consumer advocacy groups,” but are in reality mostly astroturfers themselves.  More than 100 corporate providers and special interest front groups make up the BfA, which they brazenly claim “represent the hundreds of millions of Americans who are literally connected through broadband.”

Of course, what is missing from this mess are the hundreds of millions of actual American consumers.  They aren’t on the list.  Also missing after checking more than 100 BfA member websites is any press push to notify their members they are now a part of this group.  In fact, none of the so-called public interest websites seemed at all interested in promoting their new found friends.

The BfA wants you to think the industry party list is a strength, not a weakness:

The range of members of BfA is evidence of the importance which is being placed on the issues of broadband availability and broadband adoption. It is also evidence of BfA’s commitment to being a full participant on behalf of all stakeholders to provide a central clearinghouse for the latest thinking, the most advanced assessments, and the widest variety of views and opinions on the future of broadband in America.

That’s a word salad that can be condensed down considerably to: The Mother of All Astroturf Front Groups.

A comprehensive guide to the members of the BfA can be found below.  It was developed from extensive research into the background and financing of many of these groups, as well as their membership in classic astroturf groups that are run against consumer interests.

Actiontec Electronics, Inc.
ADC Telecommunications, Inc.
Advanced Digital Broadcast
Alloptic
American Agri-Women
American Association of People with Disabilities
American Council on Renewable Energy
Americans for Technology Leadership
ARRIS
AT&T
BendBroadband
BeSafe
BigBand Networks, Inc.
BTECH Inc.
Cablevision Systems Corporation
CBM of America, Inc.
CenturyLink
Charles Industries, Ltd.
Child Safety Task Force
Cisco
CoAdna Photonics, Inc.
Comcast
CommScope, Inc.
Condux International, Inc.
Consumers First
Corning Incorporated
Cox Communications
CTIA The Wireless Association
DC-Primary Care Association
Dominican American National Roundtable
Enhanced Telecommunications Inc
Fiber to the Home Council
FiberControl
Global Crossing
Hispanic Leadership Fund
Independent Technologies Inc.
Independent Telephone and Telecommunications Alliance (ITTA)
International Association for K-12 Online
Intertribal Agriculture Council
Itaas Inc.
Jewish Energy Project
Latinos in Information Science & Technology Association
Livestock Marketing Association
LookBothWays
MANA (A National Latina Organization)
Motorola
MRV Communications, Inc.
National Association of Manufacturers
National Association of Black Telecommunications Professionals
National Black Chamber of Commerce
National Cable & Telecommunications Association
National Caucus and Center on Black Aged
National Disease Cluster Alliance
National Grange
National Puerto Rican Coalition, Inc.
NDS Limited
Net Literacy
NSG America, Inc.
Occam Networks, Inc
OFS Fitel, LLC
On Trac, Incorporated
PECO II, Inc.
People & Technology
Preformed Line Products, Inc.
Prysmian Communications Cables and Systems USA, LLC
Quanta Services, Inc
Qwest
RetireSafe
Seachange International
Sheyenne Dakota, Inc.
Silver Star Communications
Sjoberg’s, Inc
Small Business & Entrepreneurship Council
SNC Manufacturing Company, Inc.
Stop Child Predators
Sumitomo Electric Lightwave
Sunrise Telecom Inc
SureWest Communications
Suttle Apparatus Corporation
Telecommunications Industry Association
Telework Coalition
The Latino Coalition
Time Warner Cable
United States Distance Learning Association
United States Telecom Association
US Cable Corporation
US Cattlemen’s Association
US Chamber of Commerce
US Internet Industry Association
US Mexico Chamber of Commerce
Verizon
Vermeer Manufacturing Company
Windstream Corporation

When The National Cable & Telecommunications Association is on your member list, along with giant providers like AT&T and Verizon, you know we’re far, far away from defining this group as “pro-consumer.”

Over the last week pouring across websites and independent documentation, I encountered a few particularly brazen astroturf groups and the individuals that run them whose names kept coming up time and time again.

One of the more interesting groups that caught my eye was the Child Safety Task Force.  What could be wrong with a group like that?  Who could possibly ever find fault with a group that sounds like they are dedicated to unyielding protection of our children.

But when one visits their website, some cautionary lights begin to flash when you read their Mission Statement (italics mine):

“The Child Safety Task Force believes that legislation and regulatory decisions concerning children’s safety measures should be grounded in principles of good-governance and sound science.”

Perhaps I have been doing this too long, but the portions in italics sound suspicious.  A child safety group whose primary task is involvement in public policy.  Uh oh.  That smells like lobbyist.  The enigmatic “good-governance and sound science” sounds like code words for pro-industry protections from consumer groups.

Indeed, group president Robert K. Johnson is the Zelig of astroturfers.  He’s everywhere.  He was president of the now-defunct Consumers for Cable Choice, a front group for AT&T and other providers advocating for telco TV and strident opposition to Net Neutrality.  Amusingly, Johnson’s group broadened its focus by dropping the word “cable” from its title and renaming themselves Consumers for Competitive Choice (C4CC).  New name, same old notorious astroturfing.

Johnson’s idea of “child safety” is to poo-pooh the risk of phthalates in children’s toys.  I haven’t found too many consumer groups adopting that kind of pro-plastics industry position.  Johnson testified under the C4CC moniker before the House of Delegates, Maryland General Assembly with this in his opening statement:

“A case in point is the effort by some states to include phthalates in legislation limiting the amount of lead and other proven carcinogens in children’s’ toys. The effort is misplaced and ultimately detrimental to consumers.”

Apparently not satisfied that C4CC was pro-child safety-sounding enough, Johnson’s Child Safety Task Force & C4CC have linked to one another as resources without clearly disclosing their common ties.

Johnson also founded Consumers’ Voice, which Verizon trashed in 2002: “Consumers’ Voice . . . should really be named `AT&T’s Voice.’ At a recent National Conference of State Legislatures meeting, a representative from this group admitted that it is entirely supported by AT&T. Moreover, Consumers’ Voice has no state chapters or affiliates. Johnson actually is an AT&T hired gun.” – William R. Roberts, president, Verizon Maryland, Inc., (Cumberland Times-News, August 22, 2002.) Another BfA member, Consumers First (California), could easily be confused with the former, but no matter, it receives funding from AT&T (and Verizon) too, and belonged to Johnson’s now defunct Consumers for Cable Competition.

Another astroturfer paradise comes courtesy of the LawMedia Group (LMG), a secretive Washington DC public affairs firm. The firm’s website says it “unites the worlds of law, communications, strategic counseling and crisis management into seamless campaigns for Fortune 100 companies, trade associations, start-ups and non-profits.”  Ads for LMG describe its services as including “government relations” (lobbying), “grassroots lobbying,” “issue/initiative/petition management,” “media production” and “opposition research.”

LMG has a nasty habit of ghostwriting op-ed pieces on behalf of third parties, occasionally without their knowledge, and send them in for publication as supposedly written by those individuals.  Last summer, LMG submitted a column it wrote on behalf of Mel King, a Boston-area community organizer and staunch Net Neutrality advocate that turned out to oppose Net Neutrality.  King admitted that LMG was involved and refused to say whether “he was paid for the use of his name,” reported CNET News.

LMG reportedly has two major clients of interest to our readers – Comcast, the nation’s largest cable operator and Microsoft.  The former is looking for cable and broadband industry-friendly advocacy (opposition to Net Neutrality, favoring government “hands off” policies governing cable operators and broadband) and the latter has particularly been interested in Google bashing, especially surrounding a Yahoo-Google advertising deal.

One of LMG’s specialties is reportedly to co-opt groups that most would assume would have no direct interest in the issues its clients hire the PR firm to promote.  Yet suddenly these non-aligned groups  spring forth with amazingly detailed, uniform advocacy for LMG’s clients’ positions in the media, to members of Congress, and even in submitted comments to regulatory agencies.

Would you find it curious that in 2008 The American Corn Growers Association would suddenly find the need to rush a letter to the Justice Department urging them to launch an investigation into Google’s ‘search monopoly?’  Apparently the harvest was finished and they had free time on their hands.  But they only started the trend, because similar letters on the letterheads of the League of Rural Voters and the Latinos in Information Science & Technology Association also followed.  The latter just happens to also turn up as a member of the BfA.

That’s no coincidence.  BfA member Intertribal Agriculture Council, which is supposed to advocate for the wise stewardship of Native-American lands for the benefit of its people, suddenly decided to throw its two cents into last year’s Sirius-XM Radio merger debate, publicly endorsing the deal and urging the FCC to approve it. That was also an action item on the LMG priority list, according to Sourcewatch. They were joined by several other groups that common sense would suggest wouldn’t spend five minutes pondering this transaction.  Among them include (again) the League of Rural Voters and the Latinos in Information Science & Technology Association.  Some other BfA members also chimed in: the National Black Chamber of Commerce, The Latino Coalition, and the American Association of People With Disabilities.

The Latino Coalition left a lot of heads scratching in 2007 when it advocated against bans on exclusive cable providers in rental properties.  Consumers moved into apartment buildings and found they had to take whatever the landlord made available — no satellite TV or competing providers allowed.  Consumer groups howled demanding these exclusive agreements be banished to give consumers choices for subscription television.  The Latino Coalition told the Los Angeles Times that was a bad idea, and anti-consumer.

The Latino Coalition, a nonprofit advocacy group, warned the FCC that prohibiting exclusive contracts could leave minority and low-income residents with higher bills or no service at all.

“The advantages of these exclusive contracts are important selling points for apartment buildings in urban neighborhoods where residents wouldn’t otherwise have the ability to negotiate the best price for cable TV or broadband services,” Latino Coalition President Robert G. de Posada wrote to the FCC.

It comes as no surprise de Posada also opposed Net Neutrality.  He criticized the concept passionately, telling EbonyJet magazine in 2007 it represented “over regulation of the Internet.”  Net Neutrality would, according to de Posada, “stifle rather than facilitate entrepreneurism.”

Among the Coalition’s corporate partners: AT&T and Verizon.  The former’s logo appears at the bottom corner of the The Latino Coalition home page.

Apparently astroturf coordinators like to use some of the same groups for different issues.  This past May, the Intertribal Agricultural Council had a new-found common cause with, of all things, small-jet operators opposed to a proposal to shift some of the airline carriers’ federal tax burden onto small jet aviators.  Jets fly over farmland, and some might even cross over reservations, so I guess that’s a legitimate priority item for a Native American group like IAC, right?

The IAC joined forces with The Alliance for Aviation Across America (AAAA), a group run by LMG according to Sourcewatch.  But they were not alone.  Two more BfA members coincidentally also turn up as improbable members of the AAAA: the National Grange of the Order of Patrons of Husbandry and U.S. Cattlemen’s Association.

Astroturf Warehouse Club: We lie in bulk and pass the BS on to you!

Astroturf Warehouse Club: We lie in bulk and pass the BS on to you!

The practice of bringing non-aligned groups into public policy debates, particularly those involving minorities, can be a public relations miracle worker, especially for lobbying projects that don’t exactly look consumer friendly.  Often, minority public interest group involvement is highlighted by lobbyists appealing to public officials who can make or break a merger deal or vote up or down on regulatory matters.  If Native Americans, Latinos, African Americans, and the disabled are against Net Neutrality or for Internet Overcharging schemes, maybe there is something elected officials are missing.

In reality, all they frequently miss is the public relations lobbying machine in Washington that runs the show.  Even worse is when legitimate consumer voices are crowded out because all of the chairs set out for real consumers are occupied by astroturf groups pretending to represent consumer interests.

One group, the National Caucus and Center on Black Aged, was another oddity in the Broadband for America member roster, until one started taking a closer look at who serves on the group’s Board of Directors.  The connection to Verizon was immediately obvious.  B. Keith Fulton, a Board member, is also President of Verizon West Virginia.  Fulton joined Verizon in 2004 as vice president of strategic alliances and corporate responsibility, where he led a Washington, D.C.-based team that worked with more than 100 national organizations on communications related public policy issues.

But the connections with big telecom didn’t stop there.  Jarvis C. Stewart, chairman, is also Managing Partner at Stewart Partners LLC, a Washington, DC Public Relations firm.  A 2006 press release admits a further connection: “Stewart Partners currently manages the federal legislative and public affairs agendas of global industry titans such as […] Verizon.”

Muckety, which graphically illustrates public/private connections shows yet more involvement, this time with William Clyburn, Jr., who also serves on the group’s Board. It maps links between Clyburn and the U.S. Telecom Association and AT&T through Clyburn Consulting.

Clyburn Consulting’s website states:

“At Clyburn Consulting, we guide telecommunications stakeholders through the federal legislative process.  We provide strategic analyses of the technical aspects as well as the political implications of telecommunications policy debates.  The impending updates to our telecommunications laws will have a major impact for years to come on how we process voice, video, and data.  Clyburn Consulting is at the forefront of shaping the future of telecommunications. Clyburn Consulting has been instrumental in persuading Members of Congress to support major legislation for a Fortune 500 telecommunications firm (guess who? –PD).  William Clyburn is integrally involved in garnering support by not only providing access to Congressional offices for the client, but also by substantively engaging senior staff on the technical issues.”

On June 8, 2009, the National Caucus and Center on Black Aged wrote the FCC about the national broadband strategy.  Without disclosing any connections to the telecommunications industry, the group advocated:

Unfortunately too many seniors are not aware of these critical, and often life-saving, benefits. In order for more seniors to see the importance of having broadband, barriers must remain low for adoption. Only 15% of seniors cite price as the reason why they have not brought broadband into their homes. Currently, private sector network providers are investing billions of dollars to build out and maintain broadband infrastructure. This investment has enabled affordable prices. If the FCC’s broadband plan does not maintain incentives for the private sector to continue to invest, consumers will see fewer options and possibly higher prices.

We hope that the FCC will provide for continued investment on the part of private sector participants while working to bring broadband to every household in the country. Our nation’s African American seniors have so much to gain from broadband and they deserve to experience its benefits.

When some of these groups testify in hearings or submit written comments “representing consumer interests” when they are in fact acting like sock puppets backed with industry money, too many legislators may be persuaded to support an industry position thinking it’s what consumers really want.

Therefore, it’s important to provide additional disclosure about the groups, companies, and organizations that attempt to claim to speak on your behalf, the consumer broadband user.

This comprehensive breakdown of the members of BfA is by no means absolutely complete.  It is based on a week’s worth of research into the groups and their ties.  As much as possible, links are provided to back up assertions made.  Some groups may have discontinued their support of individual astroturf campaigns that have since expired, but considering the fact most of them are coming back for a repeat performance, past is prologue.

Feel free to build on this work in our Comment section.  We’ll use additional information as part of an effort to construct a resource database for consumers and others at risk of being hoodwinked by the astroturf bonanza that is Broadband for America.  Don’t bother exposing them on their own site’s community forum; it has some seriously draconian rules for user participation:

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We reserve the right to modify and amend these terms at any time without notice. It is your responsibility to remain informed of current Discuss.BroadbandForAmerica.com policies.  We further reserve our right to disable any account at any time for any reason and without notice.  If there are any rules or policies you do not understand, please contact us.  Finally, any abuse towardsBroadband for America staff and/or management in any form will result in immediate suspension of your account.

Be sure to check out our complete rundown on the members of Broadband for America.  It’s in part two of this Astroturf Special!

Time Warner Cable Launches DOCSIS 3 Speed Upgrades in NYC

Phillip Dampier September 24, 2009 Broadband Speed Comments Off on Time Warner Cable Launches DOCSIS 3 Speed Upgrades in NYC
Time Warner Cable introduces DOCSIS 3 service in New York today.

Time Warner Cable introduces DOCSIS 3 service in New York today.

Time Warner Cable today finally launches new high speed broadband service possible from DOCSIS 3 upgrades.

Calling the new service Time Warner Cable Wideband Internet, the company will now market the 50Mbps/5Mbps residential service for $99.95 per month.

“With substantially increased Internet speeds, Time Warner Cable continues to lead the way as the most popular broadband provider in New York City. Time Warner Cable Wideband Internet gives all home network devices – desktops, laptops, gaming consoles and iPhones – our fastest connection yet,” stated Howard Szarfarc, Executive Vice President of the company’s New York City Region. “Time Warner Cable Wideband Internet customers can instantly multitask – and when family members are online simultaneously, everyone can get the speed they want at the same time.”

Calling the company a proven innovator, Szarfarc touted Time Warner Cable’s “advanced fiber-optic network” for making the upgrade possible.

Yet Time Warner Cable has dragged its feet on DOCSIS 3 upgrades for more than a year now, claiming such upgrades weren’t necessary because consumers weren’t clamoring for faster speeds.  The company also had a major misstep in April when it attempted to roll out an Internet Overcharging scheme that would have raised broadband service pricing for consumers up to 300%, with no immediate improvement in service.  Those plans were shelved indefinitely.

Providers like Time Warner Cable are looking to premium services to enhance revenue, and offering higher speed service has proven successful for the company in the past.  Time Warner Cable has positively reported revenue benefits from its Road Runner Turbo add-on product, providing faster speeds to consumers for an additional $10 per month.

The rush to DOCSIS 3 in metropolitan New York may have come from increased competition from Verizon FiOS, as well as consumer awareness of Cablevision’s 100Mbps broadband service, available in suburban New York neighborhoods.

Time Warner Cable Wideband Internet is available starting today in Manhattan (below 79th Street), Staten Island and Queens (Fresh Meadows, Forest Hills and South Flushing). It will be available throughout the company’s entire NYC service area by Spring 2010.

Mark Cuban: “Someone Always Must Pay for Free” & Other ‘TV Everywhere’ Ponderings

Phillip Dampier September 16, 2009 Data Caps, Editorial & Site News, Online Video Comments Off on Mark Cuban: “Someone Always Must Pay for Free” & Other ‘TV Everywhere’ Ponderings
maverick

Mark Cuban, owner of HDNet, maintains a personal blog

Mark Cuban is on another tear this week.  Stop the Cap! reader Michael referred us to the latest.  This time it’s TV Everywhere, the cable industry’s answer to online video they get to own and control.

TV Everywhere is a concept put out by TV distributors that basically says that if you pay for cable or satellite, you should be able to watch the content you want, where you want. Everywhere. To some people this is not a good idea.  As is always the case,  many people think tv programming should be widely available for free on the internet.  Of course the content is never free. Someone has to pay to create it and we purchasers of cable and satellite services pay the subscription fees that pay the content companies and allow them to create all that content. Someone always must pay for free. Its unfortunate that there are some incredibly greedy people who think their entertainment needs should be subsidized. We aren’t talking healthcare, we are talking The Simpsons.  No one in the country has the right for their Simpsons to be subsidized.

I am uncertain why Mark is tilting at windmills here, fighting a battle with arguments that are beside the point.

He should know, as an independent programmer, permitting another cartel for video program distribution online has the potential to place control of that content in the hands of the pay television industry.  Agreements to carry a cable network on a cable system could easily become contingent on participation in TV Everywhere once it becomes more established.  Mark knows all about restrictive carriage agreements.  Some of his networks were trapped in a mini-premium HD tier on Time Warner Cable, despite his wishes to see them a part of the general HD lineup.  Once Time Warner Cable threw his networks off their cable systems nationwide, presumably so would go our online access to it as well.

For consumers, the basic concept of TV Everywhere seems like a positive development, if it brings online video content people want to see without charging them yet another fee on their pay television bill.  Consumers, raise your hand if you have a problem with more online video.

In fact, the loudest concerns about the entire endeavor these days are coming from the content producers and owners themselves.  They are the ones worrying about giving content away.

The Wall Street Journal chronicles the concerns:

While 24 networks are taking part in the Comcast trial, including Time Warner’s Turner cable networks, broadcaster CBS, AMC, BBC America, and Hallmark Channel, Walt Disney Co. (DIS) has so far avoided the “TV Everywhere” experiment because it doesn’t offer the Disney networks enough money in return for allowing their shows to be streamed over the Web.

“A new opportunity to reach consumers is very attractive … [but] we want to do so in a way that delivers proper compensation [to us] for that value,” said Disney Chief Financial Officer Tom Staggs, who spoke at the Goldman Sachs media conference on Tuesday.

That brought out Jeff Bewkes, Time Warner CEO, who scoffed at the demands for compensation.  Bewkes reminded Disney who is paying the bills.

“[The content providers are] not the ones who are going to the effort and expense of making this possible,” he remarked. “The ones that are making this possible are the distributors – the telcos, the satellite companies, the cable companies.”

Second, nobody is arguing that TV programming should be given away “free” online with absolutely no compensation.  The existing online video models are primarily advertiser supported.  The advertisers pay the costs to make the service available, and viewers endure online commercials during each ad break.  Some networks want to cram a ton of ads equaling the number a viewer would see on their television (get ready for more Snuggie and door draft stick on tape ads). Others are more realistic and will place a maximum of 30 seconds of commercials during each break.  Finding the right balance will be important — too many ads and consumers will pirate the content to avoid the ads.  Run smaller amounts and consumers will easily tolerate them.

Third, nobody I am aware of is arguing TV needs to be “subsidized.”  What does that even mean?

Besides the skirmish between content providers and the companies that want to distribute TV Everywhere, the concerns I’ve seen expressed include:

  • The concentration and control of online video content through a cable industry-controlled authentication system that is long on generalities and short on specifics regarding how it will operate.  How do non-cable subscribers get “authenticated.”  What procedures are in place to protect the competitive data other providers will have to share with any authentication process?  How about customer privacy?  Is there equity of access to TV Everywhere regardless of the pay television service the consumer subscribes to?
  • The credibility of the broadband providers’ argument that their networks are already overcrowded to the point they must “experiment” with usage caps, consumption billing, and other Internet Overcharging schemes.  Apparently their networks aren’t nearly as congested as they would have us believe, considering the fact they are participating in a project to place an even greater load on those networks.
  • Mark seems to support content portability, namely the ability for a subscriber to place that content on any device for viewing.  Good luck.  Content producers go bananas over content that can be downloaded and viewed on any device or computer, because such open standards are also open to rampant piracy.

TV Everywhere can be a consumer value-added service for pay television providers, if it’s handled in a consumer friendly way.  The cable industry does not have an excellent track record of keeping their customers in love with them.  My personal concern is that what TV Everywhere gives away for free to “authenticated” subscribers today will tomorrow be packed with advertising, carry an additional fee for access on your cable bill, and will be just one more excuse to try and ram usage caps and consumption billing down the throats of the broadband customers trying to take advantage of their broadband service.

It Begins: Wall Street Analyst Calls for Comcast & Time Warner Cable to Merge

Phillip Dampier September 10, 2009 Comcast/Xfinity, Competition 8 Comments
Bazinet

Bazinet

Citigroup media analyst Jason Bazinet is among the first Wall Street investment analysts to call for the mother of all cable mergers – Comcast snapping up control of Time Warner Cable, respectively the nation’s largest and second largest cable operators.  Comcast reported having nearly 23.9 million customers at the end of June; Time Warner Cable said it had about 13 million customers.

In a research note issued today, Bazinet argued that a merger would result in major cost savings for both operators, including $1.6 billion dollars in savings possible from volume discounts for cable network programming to $1.1 billion in savings from employee layoffs, reduced marketing expenses, technical and customer service support, billing, and combining equipment purchases, among other things.  The total net present value of the synergies would come to around $11 billion to $12 billion. That’s not far from Time Warner Cable’s current market value of about $14 billion, according to The New York Times.

A super-sized Comcast would also be able to leverage lower prices when competitively necessary to keep a price advantage over satellite television and telephone company TV, according to Bazinet.

Both Time Warner Cable and Comcast have not publicly indicated any interest in combining forces.  Aside from the regulatory headaches probable from a more skeptical Obama Administration that might aggressively counter such a merger, Comcast Chief Operating Officer Stephen Burke questioned whether the cost savings were anywhere near as high as Bazinet speculated.

Multichannel News quoted Burke:

“We would like to get bigger if the economics were right,” Burke said. “Its pretty hard for me to see how there would be synergies on the programming side or on the hardware side when you go from 24 million subscribers to 27 [million] or 30 [million].”

Time Warner CEO Glenn Britt refused comment.

Still, Wall Street investors were interested.  Time Warner Cable stock shot up 3.5% this afternoon, while Comcast’s rose just a few cents during afternoon trading.

Comcast $hopping $pree: What To Buy First? — The Coming Cable Consolidation

Phillip Dampier September 10, 2009 Comcast/Xfinity, Competition 4 Comments

“Comcast isn’t looking to make a $50 billion purchase.”

Stephen Burke, Comcast Chief Operating Officer

Burke

Now that Comcast has been freed from that pesky provision of the 1992 Cable Act, authorizing the Federal Communications Commission to set a maximum size for large corporate cable operators, the nation’s largest cable operator is now considering breaking out the checkbook and going on a shopping spree.  That is likely to spark a merger and acquisition frenzy among several players in the industry which could dramatically reduce America’s choices for telecommunications services.

Bloomberg News this evening quotes Stephen Burke, Comcast’s Chief Operating Officer, that it will consider buying other cable operators at a “good price.”

“If there is a way to acquire cable systems for what we consider a good price, ones that are well managed, we would certainly look at whatever is out three,” Burke, 51, said today at a Bank of America Corp. conference in Marina del Rey, California. Still, the company “isn’t waking up every morning” evaluating how it can become bigger, he said.

The Wall Street Journal calls the decision by the U.S. Court of Appeals in Washington, freeing Comcast from its limits, the start of “the coming cable consolidation.”

Martin Peers, writing for the Journal, said that when the dust settles, phone companies might own satellite TV providers and cable companies might end up consolidating into one or two super-sized providers blanketing the entire country with service.

Consumers would be left with a handful of providers for all of their communications needs, from telephone to broadband to television, if the courts open the door with more decisions favorable to the industry and antitrust reviews aren’t aggressively undertaken.

Starting with Comcast, Burke thinks Comcast’s first priority might be to buy up more programmers.  Comcast already has ownership interests in several cable networks, and Burke feels “content channels are good businesses, and we wouldn’t be doing out job if we didn’t try to figure out a way to get bigger in those businesses.”

With Comcast and Cablevision joining forces to sue their way out of the cable network exclusivity ban, owning and controlling those networks, and what competitors get access to their programming, could be an important asset in an ever-consolidating marketplace.  Imagine if U-verse or FiOS was denied access to ESPN, The Weather Channel, CNN, and other popular cable channels.  Would subscribers be compelled to switch providers if they could no longer get the channels they want to watch?

The Journal ponders the coming consolidation frenzy:

Comcast and other cable companies will probably need to consider more consolidation — if not now, in the next couple of years. They are still losing market share to satellite and phone rivals. Comcast lost nearly 700,000 basic subscribers in the year to June. Time Warner Cable has fallen to No. 4 among TV providers, behind satellite firms DirecTV Group and Dish Network.

Cable operators are more than offsetting video losses by selling phone and Internet-access. Eventually, though, those opportunities will peter out. And phone companies’ competitive threat in video could be enhanced by a combination with satellite TV.

The newspaper speculates about this kind of marketplace in the near future:

Today's pay television marketplace

Today's pay television marketplace

AT&T DirecTV: The Journal ponders an AT&T buyout of DirecTV resulting in a reduction in AT&T’s investment in U-verse, pushing consumers to its newly-acquired satellite service and redirecting investment into the overburdened AT&T mobile phone network.

VerizonDISH: A Verizon buyout of DISH would allow the phone company to push more rural customers to DISH satellite service, and reduce the expense of wiring all but the nation’s largest cities with fiber optics.

Comcast (formerly Comcast & Time Warner Cable, if not others): A supersized Comcast absorbs Time Warner Cable and becomes an even more dominant cable operator, leveraging its investment in Clearwire to offer a  wireless data option to stay competitive with the mobile phone companies like AT&T and Verizon Wireless.

That would leave most Americans with just three choices for telecommunications services capable of bundling multiple products together.  Wouldn’t such a merger-mania trigger antitrust implications and government review?

The Journal doesn’t think so:

Would such a deal pass antitrust scrutiny, even absent the ownership cap? There is a good chance, say several antitrust lawyers. A major focus of antitrust law is whether a merger reduces competition in a way that could raise prices or otherwise hurt consumers. As cable operators generally don’t compete with one another, merging wouldn’t cut competition.

But what kind of benefits would be found for consumers?  If one resides in a city too small to be judged worthy of fiber optic deployment, consumers could be told to get the satellite television service and live with the copper wiring the phone companies provide today.

Cable operators would be in a fine position to compete, as they traditionally have, against satellite television because of the technical limitations of satellite service, ranging from consumer objections to having a dish on their home, to a limit on the number of sets that can be wired, to the inability to get a clear view of the satellite because of nearby trees or other obstructions.

Who pays for the debt likely incurred from a bidding war during a merger frenzy?  Guess.

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Stop the Cap!